A monopoly is a market envir onment where there is only one provider of a certain economic good or service

1. Monopoly

MONOPOLY

2. WHAT IT IS:

•A
monopoly is
a market envir
onment where
there is only
one provider
of a certain
economic good
or service.

3. HOW IT WORKS (EXAMPLE):

o For
a true monopoly to be in
effect, each of the following
characteristics would typically be
evident:
1.A sole provider of a viable
product or service.
• 2.A lack of any close substitutes
for consumers to choose from.
• 3.High barriers to dissuade the
entry of any potential
competitors.

4. WHY IT MATTERS:

In a free enterprise
system, prices are largely
determined by the
competing market forces
of supply and demand.
Buyers and sellers both
exert an influence over
prices, and this
eventually results in a
state of equilibrium.

5.

• However,
in a monopolistic
environment, a single company or
provider has absolute control over
the supply that is released into the
market, giving that particular
provider the ability to dictate
prices. In the absence of any
competition, the lone seller is free
to keep prices artificially high,
without fear of being undercut by
another provider. Obviously, such a
scenario is usually highly
unfavorable for consumers, as it
gives them no recourse to seek
alternatives that might force prices
lower.